Published: 11 February 2010 22:36 GMT | Last updated: 11 February 2010 23:21 GMT
Nassir Shirkhani, Beirut for Upstream
Shah project and integrated scheme are key planks of Persian Gulf emirate’s energy strategy amid constraints in crude sector
Abu Dhabi’s relatively modest conventional non-associated natural gas reserves have prompted the Persian Gulf emirate to embark on costly development projects worth more than $20 billion in a bid to boost supplies to meet galloping demand from the United Arab Emirates.
The UAE has estimated natural gas reserves of 212 trillion cubic feet — the fifth largest in the world — but the bulk of it is either sour or associated with oil production.
The country’s strict policy of zero flaring and a determination to rely on its own resources are the driving forces behind the costly schemes now under way.
The two major gas developments centre on making use of associated gas from offshore and onshore fields and tapping into costly sour gas reserves, development of which is proving challenging because of high contents of toxic materials that need to be handled safely.
The deals underpin efforts by state-owned Abu Dhabi National Oil Company (Adnoc) to guarantee enough supplies to meet robust demand from power plants, heavy industries and the company’s own needs for re-injection.
They will deliver 1.5 billion cubic feet per day once completed in the next five years but Adnco may still struggle to satisfy demand.
Abu Dhabi, the capital of the UAE, owns more than 90% of the country’s oil and gas reserves, and the government sees securing new gas supplies as crucial to the success of its economic development in the next two decades.
Ismail al Ramahi, manager of Adnoc’s gas processing division, is upbeat despite the challenges in monetising sour gas. The UAE is pursuing a number of major strategies and is making progress on all fronts, he says.
"We went back to the drawing board to develop ideas to get more gas to [the UAE] and Abu Dhabi," Ramahi told the Gas Arabia Summit last week. "The innovative projects will put Abu Dhabi on the map in the field of gas."
A major initiative involves integrating gas production from the onshore and offshore fields with the aim of bringing 1 Bcfd of offshore gas ashore.
The first stage of the Integrated Gas Development Project — being undertaken by Adnoc’s subsidiary, Abu Dhabi Gas Industries Company (Gasco) — is nearing completion with the second stage scheduled to start up in 2013, Ramahi says.
The bulk of the associated gas will come from the offshore Umm Shaif field.
Gasco has formally selected contractors for four of the five main engineering, procurement and construction packages to build onshore facilities at Habshan and Ruwais for the $11 billion integrated gas project.
A consortium of JGC of Japan and Maire Tecnimont of Italy won the $4.7 billion Habshan gas processing contract while South Korea’s Hyundai Engineering & Construction picked up the $1.7 billion Habshan utilities contract. Another Korean player, GS Engineering, and UK-listed Petrofac won the $2.1 billion Ruwais liquids extraction deal while US company CB&I bagged the Ruwais storage contract.
At the same time, Adnoc and US supermajor ConocoPhillips have agreed to develop the sour gas reserves of the onshore Shah field at a cost of more than $10 billion.
Ramahi is confident the Shah project will go ahead and serve as "a landmark for sour gas projects around the world".
Tendering for the main construction and engineering packages on the sour gas project is under way with first gas from Shah scheduled to flow in late 2013 or early 2014, he says.
However, ConocoPhillips, which has a 40% stake in the sour gas project, has yet to sanction the scheme, highlighting the fact that it is still not that far along the development path.
The Adnoc-ConocoPhillips joint venture has yet to award the main EPC packages tendered last May.
They cover upstream gas gathering facilities, the gas processing plant, the sulphur recovery units and the utilities.
One major challenge is how to transport high volumes of dangerous sulphur from the project.
Adnoc and ConocoPhillips are considering two different ways of transferring millions of tonnes per annum of sulphur between production and processing facilities at the Shah gas field and processing and distribution units at Habshan and Ruwais.
A complex pipeline option would carry the sulphur in liquid form while a railway would transfer the chemical in a granulated pellet form. The partners had originally planned to use a 275-kilometre pipeline to transfer the sulphur but a lack of interest from contractors in the potentially dangerous scheme brought the rail option to the fore.
The rail option may force a change in the scope of the project as facilities have to be built at Shah to prepare the sulphur for rail transportation.
Ramahi says there are "many technological obstacles" in handling the sulphur content.
ConocoPhillips is counting on the sale of about 10,000 tonnes per day of sulphur stripped out from the gas to help boost the economics of the Shah project, which will extract 1 Bcfd of gas to produce 570 million cubic feet per day of sales gas. The joint venture will also benefit from the sale of 50,000 barrels per day of high-value condensate.
Shah remains key to developing other sour gas projects at Bab and Hail to help Abu Dhabi ensure enough domestic supplies.
Abu Dhabi produces 6 Bcfd of gas but exports about 1 Bcfd in the form of liquefied natural gas. That leaves about 5 Bcfd for domestic consumption and re-injection.
The UAE is a net importer, receiving 2 Bcfd of Qatari gas via an undersea pipeline built by Dolphin Energy.

Gladwell tries to describe when tipping points occur, and thus, how epidemics start. He also tries to show how we can create tipping points ourselves. He proposes three laws of tipping points: The law of the few, the stickiness factor, and the law of context.

The Law of the Few

The law of the few is a law about the structure of our social network and how messages are passed through word of mouth. It attempts to classify three important types of people who affect the rapid spread of messages through the network. These three types of people are connectors, mavens, and salesmen.

Connectors are the socialites. They are people with many friends and acquaintances who spend time maintaining these connections. From the network perspective, these are the most central nodes in the social network. Gladwell devised a simple test which allowed him to determine that the number of connections a person has is measured by a power law. This means that connectors are rare in society, but they maintain many more times the number of relationships than the average person does. Because of their ability to spread a message to a huge number of people quickly, connectors are central to understanding how tipping points are reached.

Mavens are the information gatherers of the social network. They evaluate the messages that come through the network and they pass their evaluations on to others, along with the messages. We can view mavens as regulators of the network because they have the power to control what flows through the network. We trust mavens, and this is especially important because their assessments can often make or break the tipping of an epidemic. Mavens drive many of our social institutions. They are the people who inform the better business bureau, regulate prices, write letters to senators, etc. in order that the rest of us don't have to. Though Gladwell does not argue this explicitly, his description of mavens suggests that mavens can be specialized in areas of expertise and thus many of us may be mavens in our particular areas of interest.

Salesmen are what the name implies. They are persuaders who are capable of propagating messages through the force of their character. Thus, regardless of the message content or their expertise in the area, they have a certain ability to sell which helps them move messages which may be of importance to them. This ability to persuade strangers to accept a message is why salesmen are important in tipping epidemics.

The Stickiness Factor

The Stickiness Factor is a law about the actual informational content and packaging of a message. Connections and the personal character of the people trying to spread a message can certainly help it spread, but if the message is not worth spreading, then it is doomed to failure. The stickiness factor says that messages must have a certain character which causes them to remain active in the recipients' minds. Moreover, they must be deemed worthy of being passed on.

Gladwell admits that the exact characteristics of a message which make it sticky are very difficult to pin down. The stickiness of a message can often only be determined by testing and experimentation. In most of the examples which Gladwell provides, he shows that people often find that their initial belief in the correct packaging for a message is not optimal. The message must be repacked and tweaked several times before tiny changes cause the message to become sticky.

Law of Context

The law of context is a rule about the environment in which a message spreads. Small changes in the context of a message can determine whether or not it tips. Thus, these social epidemics can fail if the geographic location where they are introduced is wrong or if the current mental state of the population is not prepared for the message.

Gladwell also points out the importance of small groups for the distribution of messages. He argues that the maximum number of members that can reasonably exist in a human group is one hundred and fifty. He believes that biological limitations in our brain mean that any group larger than this will automatically segment into factions and decrease efficiency. The existence of small groups helps the spread of a message because each member of the group knows every other one and thus the message can easily diffuse through the whole group."